Panama Leaks Update – 8th April – 2016

The Panama Leaks keep drawing headlines. Causing problems for leaders across the globe. Currently a lot of attention is focused on the UK, which appears to be the center of the links to the Panama tax haven. Calls for the resignation of Prime Minister David Cameron are sounding loud on social media and in British press after his admissions that he indeed held personal stock in his late fathers Panama based fund and sold them for a profit.

Further government links in the UK have been hinted in the British media with George Osborne being accused of stashing away profits from a 6m pound property deal in a Panama company.

Aside from the UK there is still talk about Russian president Putin having links to the Panama scandal. However, no further solid evidence has been presented and in fact Kremlin has hit back with accusations of the leak being information warfare aimed at their president.

In Iceland the prime minister quickly resigned following the scandal. New polls in Iceland show The Pirate Party surging to more than 40% support, however for now the government there is attempting to avoid elections by simply naming a replacement prime minister.

The Panama Papers

The panama papers have already started making heads roll. The Icelandic prime minister resigned after being directly implicated in the leak. Several others are taking heavy fire in the media. However, the Panama Papers have the ability to topple many more heads of state and public servants across the globe.

What are the Panama Papers ? Basically a leak of files from a law-firm helping high earners move income and wealth to Panama to avoid paying taxes in their home countries. As such the Panama Papers are a simple whistle blower case. The unique thing about the Panama Papers is that they do not expose the wrongdoing of any specific person or government, but the potential legal and moral wrongdoings of thousands of government members, public servants and business people across the world.

It is worth noting that sending money to Panama, having a company or a bank account there is not necessarily illegal in any way. In fact usually it is specifically set up not to be. In terms of perception however being named as making maneuvers of this sort is what is damaging, it is not about legal but moral.

Panama Papers Downfalls ?

The panama papers signify a new form of information warfare. Someone found the files. Sent the file to a newspaper and exposed thousands of people across the world. We have no overview yet over everyone implicated. We do not know if the whist blower had a hidden agenda. Was he targeting someone in particular. Has he deliberately left someone out? Months of investigations of the terabytes of documents might reveal the answers down the line.

What we know right now is that several prolific politicians have found themselves in the firing line. First to fall was the Icelandic prime minister as mentioned. Highest in the headlines so far has been Vladimir Putin of Russia and David Cameron of the UK.

Putin is not actually directly implicated by the papers, but media reports link him to funds moved to Panama to the tunes of 2bn dollars via friends, backers and family members. Is that a problem for Putin ? Honestly. No. Whilst democratically elected Vladimir Putin is in a uniquely strong position in Russia in which a perception of him being a bit too close to something dubious matters little and surprises less. As such, Putin does in fact seem like more of a distraction for more vulnerable targets tarnished by the leak.

David Cameron Tax Dodging Links

David Cameron, prime minister of the UK, is a bit of special case in relation to the leak. He is not yet directly implicated, however his father is and several primary donors of his party are as well. That in itself is embarrassing, particularly the family link to tax evasion. However, David Cameron has himself raised himself above the fray on tax evasion by publicly maintaining that being legal is not enough, acting morally is required too.

For instance David Cameron was explicitly outspoken on the amoral but not illegal tax dealings of British comedian Jimmy Carr:

Aside from these moral stances on creative tax dodging David Cameron has stated that the UK was a world leader in combating tax havens and curbing tax dodging. Such statements obviously sound almost outer worldly after the revelations that “the UK are at the heart of tax dodging networks“.

And worse: David Camerons own father was an active perpetrator of these tax avoidance schemes, thus raising clear questions about David Camerons own wealth, efforts to combat tax dodging and honesty in general. To make matters almost comical David Cameron chairs an international conference about stopping international tax evasion schemes next month.

David Cameron is unlikely to fall as a consequence of the Panama Leaks despite being heavily tainted. He has a solid majority in parliament backing him and is not running for re-election. As such the opposition has no possibility of removing him. His own party could but given he is already a dead-man-walking politically it would make sense to keep him in nr.10 till after a potential EU referendum loss, another unpopular budget and other issues that would harmfully tarnish a new Conservative leader.

Vladimir Putin and David Cameron in Panama Papers Leak

Prominent Casualties ?

Are we likely to see other prominent casualties of the leak ? Yes. But exactly who is quite unpredictable. Aside from David Cameron, the Icelandic Primeminister and Vladimir Putin most of those implicated are either having more indirect links to the scandal or they are simply difficult to remove by democratic means.

For instance the King of Saudi Arabia has been named. Does it make him unpopular at home? Maybe. Does it topple him? Unlikely. There is no process for removing a Saudi king, nobody to do it and presumably no great shock that he has wealth stashed away either. Similar is true for several Middle Eastern, African and South American leaders and ex-leaders.

In several cases it is possible that the revelations could have influence down the road. The scales could be tipped for the next presidential elections in Argentina. The Ukrainian president could stumble to uprisings or votes. The United Arab Emirates president could face problems. But there is no automatism to it. It would require local public outrage

Is There More ?

More ? The Panama Papers are but a fraction. These are the papers from one big law firm specialized in helping companies and individuals stashing away cash in Panama. Several other companies have the same metier. Plenty of other tax havens are as big or bigger destinations of wealth than Panama. Hong Kong. Cayman Islands. Seychelles. Andorra. Bermuda. British Virgin Islands. Switzerland. Mauritius. And many many more. Each one could have its own leak. From each of the law firms working it. The current leak is might look enormous but it covers a fraction of the entirety.

This of course means too, that nobody is off the hook simply because they are not listed as implicated in this leak. They might simply keep their stash elsewhere. The interesting thing for us though is the political and electoral outfall. We have seen one actual fall. Plenty of humiliation. The longer term consequences are harder to predict. Voters might rise to demand a stop to these practices. Voters might demand measures to hold their leaders accountable, personally and politically. Or. We might settle back into X-Factor and Big Brother when the Panama buzz is over.